“The opening of government contracts for factoring” — comments of Tatiana Tereshchenko and Ruslan Mukhametshin for the “Method” journal

The opening of state contracts for factoring will lead to an increase in the turnover of the factoring market by trillions of rubles in the long term, but this is not a business of the short future. The market will be develop appropriate practices more than a year.

Tatiana Tereshchenko, head of analytical direction of the audit and consulting group "Prime Advice":

Factoring was possible earlier in relation to public procurement, problems arose due to the conflicting positions of departments, and certain formalism associated with the execution of state contracts under the Federal law № 44. For example, the Ministry of Finance has repeatedly pointed out that the transfer of monetary rights to the factor is technically impossible due to the peculiarities of budget regulation and creates additional risks for the state customer, such as payment to the wrong person or the inability of making a claim for quality (see letter dated March 11, 2016 № 02-02-04/13740).  From a substantive point of view, such concerns are clearly far-fetched, taking into account that only a monetary claim is assigned and that the supplier retains all other responsibilities, including quality assurance. On the contrary, the FAS of Russia (in a letter dated October 2, 2013 № AD/38430/13) and the Ministry of economic development (in a letter dated March 11, 2015 № 02-02-08/12916) reasonably pointed out that there is no ban on factoring in public procurement. This conclusion was supported by judicial practice (for example, see the decision of the Arbitration court of the Moscow district of March 31, 2015 № F05-395/2015). However, precedents were still single, and the lack of consensus among regulators as a whole created increased risks and actual difficulties for the use of factoring in public procurement. 

At the moment, changes have been made to the Civil code, but not to the 44‑Federal law. However, in the framework of public procurement, all actions should be performed only in strict accordance with the relevant legislation.

A simple example: according to paragraph 2 of article 34 of the Federal law № 44-FL at the conclusion and execution of the contract change of its terms is not allowed, except in cases provided by law. Formally, this means that the state customer can pay only on the details specified in the contract.

It is not enough just to change the provisions of the Civil code. It is also necessary to ensure the unity of opinions at the level of regulatory bodies and to accumulate the necessary judicial practice, revealing the essence of factoring and what are the consequences of using this tool,

- concludes Tatiana Tereshchenko. Nevertheless, most of the experts surveyed by the "Method" believe that the amendments to the Civil code give a green light to factoring in the public sector, recognizing that the public procurement system is procedurally quite complex, and state customers are not flexible partners in procedural matters.

Business, lawyers and factoring companies are ambiguous both in assessing the priority business segment, which will act as a driver of state factoring, and in assessing the prospects for cooperation caused by the nuances of interaction between businesses of different scale of activity with state customers.

By the way, the Strategy for the development of small and medium businesses until 2030 includes measures for the development of factoring — for example, it is planned to organize the functioning of a single electronic platform, including for the purposes of assignment of their debts by entrepreneurs to factors, Tatyana Tereshchenko points out.

Ruslan Mukhametshin, head of the consulting Department of "Prime Advice", believes that big business will not use factoring on state contracts — the political component based on the long-term prospects of cooperation will be one of the primary factors.

The use of factoring de facto will indicate problems with working capital. And it is much easier to agree with the customer on the acceleration of payment, a larger amount of advance work or just take a loan secured by the proceeds of the contract, it is almost certainly, will be cheaper than factoring and will not attract much attention,

- Ruslan Mukhametshin adds.